Yarway files Chapter 11 plan based on asbestos trust funding agreement

By Caroline Salls

Pittsburgh, Dec. 23 – Yarway Corp. filed a plan of reorganization and related disclosure statement on Monday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Yarway reached an agreement with parent Tyco International Ltd., the official committee of asbestos claimants appointed in Yarway’s Chapter 11 case and a future claims representative, to fund a section 524(g) trust for the resolution and payment of current and future Yarway asbestos claims.

The agreement, which will be implemented through the Chapter 11 plan, will resolve the potential liability of company protected parties for pending and future derivative personal injury claims related to exposure to asbestos-containing products that were allegedly manufactured, distributed and/or sold by Yarway.

Under the Chapter 11 plan, an asbestos settlement trust will be established.

Yarway will contribute a total of $325 million in cash to the trust, which includes $100 million related to the settlement of intercompany amounts allegedly due to Yarway, as well as 100% of the equity of the reorganized company.

In exchange for the trust contribution, Tyco said each of the company-protected parties will receive the benefit of a release from Yarway and an injunction under section 524(g) of the Bankruptcy Code permanently enjoining the assertion of Yarway asbestos claims against those parties.

Treatment of creditors will include the following:

• Administrative expense claims and general unsecured claims will be paid in full in cash;

• Secured claims will be reinstated, and any required amounts will be paid in full in cash;

• Asbestos personal injury claims will be channeled to the trust and resolved in accordance with the terms of the trust;

• Holders of intercompany claims will each receive $10 in cash; and

• Equity interests in Yarway will be cancelled, annulled and extinguished.

A disclosure statement approval hearing is scheduled for Jan. 26.

Yarway, a Boca Raton, Fla.-based industrial valve maker, filed for bankruptcy on April 23, 2013. Its Chapter 11 case number is 13-11025.

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